Lighting Industry – India February 2015
Executive Summary Market
Drivers & Challenges
Trends
Government
Indian lighting industry was worth INR 135.04 bn in 2013, growing at a CAGR of 19.1% A formidable feature of this sector is the vast distribution network of players LED lighting, a sub-set of the lighting industry, has been growing at a CAGR of 46.0%
Drivers
Challenges
Increase in Disposable Income Growth in Rural Segment Rise in Organized Retail Boom in Real Estate Sector Changing Lifestyle of Consumers Increasing Availability of Credit Improvement in Rural Electrification Growing Population
Tough Competition from Unorganized Players Depreciation of Rupee and Rise in Energy Costs Lack of Consumer Awareness About Energy-Efficient Lighting High Import Dependency
LED Technology Development Digital Signage Solar LED Lights Published LED Standards Regulatory Stakeholders – LED Initiatives Government Support for LED Industry in India Major Players
Competitive Landscape
Bajaj Electricals Ltd.
Crompton Greaves Ltd.
GE India Industrial Pvt. Ltd.
Orient Paper & Industries Ltd.
Osram India Pvt. Ltd.
Philips India Ltd.
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•Macroeconomic Indicators •Introduction •Market Overview •EXIM Data •Drivers & Challenges •Government Initiatives •Trends •Competitive Landscape •Strategic Recommendations •Appendix LIGHTING INDUSTRY IN INDIA 2015.PPT
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The fragmented and complex lighting market can be categorized into four broad dimensions Applications
Technologies
Geographies
End-market Structure
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Lighting market in India is showing an upward trend with a rise in consumer base Market Overview
Lighting Market Size and Growth
• The Indian lighting industry reached INR ‘m1’ in 2013, growing at a CAGR of ‘r1’% over 2010-13 • Lighting industry in India is divided into different types of lighting systems • Lighting energy consumption in commercial buildings is around ‘r2’-’r3’% • Energy consumption from lighting in industrial plants is around ‘r4’-’r5’%
INR bn y5
y3
p
q
s
y1 x2
x3
x4
x5
x6
Lamps Market – Segmentation (2013)
Lighting Market – Domestic Production Category 2
r
t
y2
x1
Category 1
u
r6%
y4
Category 3 Segment 1
100%
a1%
b2%
c2%
d2%
40% 20%
a2%
b2%
c2%
d2%
0%
a3%
b3%
c3%
d3%
2010
2011
2012
2013
80% 60%
Segment 2
r9%
Segment 3 r7%
r8%
Note: Lamps includes incandescent, fluorescent, halogen and other lamps LIGHTING INDUSTRY IN INDIA 2015.PPT
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Rise in lighting equipment production in India… Non-LED Lights – Exports
Non-LED Lights – Total Exports (Value)
• Export of lighting products from India witnessed a CAGR of ‘r1’% between FY 2012 and FY 2014 • Although cheaper products from ‘c1’ have a bigger market share in global lighting exports, declining cost competitiveness of ‘c1’ holds strong growth prospects for India in the near future • Primary export destinations include ‘c2’, ‘c3’ and ‘c4’
INR mn y3 p
y2
r
q
s
y1 2012
2013
2014
2015 (AprAug 2014)
Note: Figures are for the respective financial years
Non-LED Exports – Country-Wise Segmentation (2015)
Non-LED Exports – Country-Wise Segmentation (2014)
Country 1 r2%
Country 1
r8%
Country 2
Country 2
Country 3 r7% r3% r4% r6%
Country 4 Country 5
Country 3 r13%
r9%
Country 5 r10% r12% r11%
Others
r5%
Country 4 Others
Note: Data pertain to HS Code 8539: Electric filament or discharge lamps (including sealed beam lamp units and ultra-violet or infra-red lamps), arc-lamps LIGHTING INDUSTRY IN INDIA 2015.PPT
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…has resulted in eventual rise in exports LED Lights – Exports
LED Lights – Total Exports (Value)
• Export of lighting-emitting diodes (LEDs) from India has been growing rapidly, witnessing a CAGR of ‘r1’% between FY 2012 and FY 2014 • Although ‘c1’ has the largest market share in global LED exports, declining cost competitiveness of ‘c1’ holds strong growth prospects for India in the near future • ‘c2’, ‘c3’ and ‘c4’ are traditionally the largest markets for Indian LEDs
LED Exports – Country-Wise Segmentation (2015)
INR mn y3
Country 3 Country 4 Country 5 r2%
2014
2015 (AprAug 2014)
y1 2012
2013
Note: Figures are for the respective financial years
LED Exports – Country-Wise Segmentation (2014)
Country 1
r13%
Country 2
r3%
s
q
y2
Country 1
r6% r7% r4% r5%
r p
Country 2 Country 3
r11% r12%
Country 4
r10%
Others
r8%
r9%
Country 5 Others
Note: Data pertain to HS Code 85414020: Light emitting diodes (electro-luminescent) LIGHTING INDUSTRY IN INDIA 2015.PPT
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Drivers & Challenges – Summary
Drivers
Challenges
Increase in Disposable Income
Tough Competition from Unorganized Players
Growth in Rural Segment Rise in Organized Retail
Depreciation of Rupee and Rise in Energy Costs
Boom in Real Estate Sector
Lack of Consumer Awareness About Energy-efficient Lighting
Changing Lifestyle of Consumers
High Import Dependency
Increasing Availability of Credit Improvement in Rural Electrification Growing Population
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Publication of LED standards is expected to transform the lighting industry in India Published LED Standards • Recently announced standards on LED lighting are expected to bring about large scale lighting revolution in India Standards have been brought out by ‘n1’ and ‘n2’ to help phase out inefficient lighting
• Global standards have been considered while formulating the Indian standards which are expected to ensure that the Indian LED manufacturers meet the minimum manufacturing criterions • Standards based on international trends are also expected to help the Indian LED products to compete with the international counterparts
Sl No
IS No
Title
1 2 3 4 5 6 7 8 9 LIGHTING INDUSTRY IN INDIA 2015.PPT
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Trends – Summary
LED Technology Development
Key Trends Solar LED Lights
Digital Signage
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Porter’s Five Forces Analysis Threat of New Entrants
Impact i4 Bargaining Power of Suppliers
Impact i1
Impact i5 Competitive Rivalry
Threat of Substitutes
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Impact i2 Bargaining Power of Buyers
Impact i3
11
Competitive Benchmarking (1/5) Public Trading Comparable (FY 2014)
Company 1
Company 2
Company 3
Company 4
Company 5
Market Capitalization (INR mn)
Share Price (INR)
EV/EBITDA (x)
EV/Revenue (x)
PE Ratio Note: Top 5 Public companies based on the Market Capitalization; Market Capitalization, Share Price and PE ratio is as of 18/11/2014 LIGHTING INDUSTRY IN INDIA 2015.PPT
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Competitive Benchmarking (2/5) Key Ratios of Top 3 Companies – Operational Basis (FY 2014) (1/3) Gross Margin
%
20 10 0
Net Margin a3
40 30
Operating Margin a2
a1 b2
b1
b3 c2
c3
c1
-10
Company 1
Company 2
Company 3
• Company 3 recorded gross margin of a3%, higher than both Company 1 and Company 2 which recorded gross margin of a1% and a2% respectively • Company 3 recorded operating margin of b3%, higher than both Company 1 and Company 2 which recorded operating margin of b1% and b2% respectively
• Company 2 recorded net margin of c2%, higher than that of Company 1 which recorded net margin of c1% but lower than that of Company 3 which recorded net margin of c3%
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Public: Company 1 (1/4) Company Information
Offices and Centres – India
Corporate Address Tel No. Fax No.
Website Year of Incorporation
H1
Ticker Symbol Stock Exchange
Head Office
Products and Services Category
Products/Services
Key People Name
Designation Chairman, MD and CEO Joint MD President CFO and EVP
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Public: Company 1 (2/4) Financial Snapshot
Key Ratios
Total Income
INR mn
b
y3
c
a y2 y1
Profit / Loss
p
q
2011
2012
Particulars
INR mn z3
d
z2
s
r
z1 2013
2014
Financial Summary
• It reported total income of INR ‘s’ in FY 2014, registering an increase of ‘r1’% over FY 2013 • It earned an operating margin of ‘r2’% in FY 2014, a decrease of ‘r3’ percentage points over FY 2013 • It reported debt to equity ratio of ‘n1’ in FY 2014, an increase of ‘r4’% over FY 2013
Key Financial Performance Indicators Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) PE Ratio (Absolute)
2014
2013
2012
2011
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios
• The company earned a net loss of INR ‘d’ in FY 2014, as compared to net profit of INR ‘c’ in FY 2013
Indicators
y-o-y change (2014-13)
Value (18/11/2014)
Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
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Decline
15
Public: Company 1 (3/4) Key Business Segments Segment 1
Segment 3
Segment 2
Segment 4
y6
p1%
y5
p2%
Key Geographic Segments Segment 1
p4%
p3%
Segment 2
y6 y5
y4
q1%
q2%
q3%
r1% s1%
r2% s2%
r3%
2011
2012
2013
y3 y2 y1
s3%
q4%
y4 y3
r4% s4%
y2
t1%
t2%
y1 2011
2014
2012
t3%
t4%
u1%
u2%
2013
2014
Business Highlights Description
News
Overview
• Company 1 is part of the ‘n1’ which consists of other companies such as ‘n2’, ‘n3’ and ‘n4’ • It was incorporated in ‘y1’ as ‘n5’ and was renamed to Company 1 in ‘y2’ • The company has a portfolio of over ‘a1’ different products under the segments ‘s1’, ‘s2’, ‘s3’, ‘s4’ and ‘s5’ • It also holds exclusive distribution license for ‘n6’ appliances in India
• The company has a strong distribution network of over ‘a2’ distributors and ‘a3’ dealers
Business Operations
Its ‘s1’ has a retail network of over ‘a4’ outlets, while the brand ‘n6’ would have a retail network of ‘a5’ outlets by the end of ‘y3’
• It also has a franchised customer care network of ‘a6’ centers
Note: Business Segments and Geographic Segments are based on total revenues LIGHTING INDUSTRY IN INDIA 2015.PPT
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Public: Company 1 – SWOT Analysis (4/4)
S
W
O
T
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Private: Company 2 (1/5) Company Information
Offices and Centres – India
Corporate Address H1 Tel No. Fax No. Website Year of Incorporation Head Office
Products and Services Category
Products
Key People Name
Designation Director
Director Director Director
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Private: Company 2 (2/5) Shareholders of the Company Name
Ownership Structure No. of Shares held
Category 1 Category 2 Category 3 Category 4
r3%
r1% r4%
r2%
Note: AGM as of 29th Sep 2012 LIGHTING INDUSTRY IN INDIA 2015.PPT
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Private: Company 2 (3/5) Financial Snapshot
Key Ratios
Total Income
Net Profit/Loss
INR mn y6
Particulars
INR mn a
b c
y5
z5
d
y4 y3 y2
p
q
r
s
y1 2010
2011
2012
z4 z3
Return on Equity
z2
Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
2013
2013
2012
2011
2010
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin
z1
y-o-y change (2013-12)
Cost Ratios
Financial Summary
Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
• The company earned a net profit of INR ‘d’ in FY 2013, as compared to net profit of INR ‘c’ in FY 2012
Liquidity Ratios
• It reported total income of INR ‘s’ in FY 2013, registering an increase of ‘r1’% over FY 2012
Leverage Ratios
• It earned an operating margin of ‘r2’% in FY 2013, an increase of ‘r3’ percentage points over FY 2012 • It reported debt to equity ratio of ‘n1’ in FY 2013, a decrease of ‘r4’% over FY 2012
Current Ratio Cash Ratio
Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
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Decline
20
Private: Company 2 (4/5) Business Highlights Description
News • Company 2 is part of the Indian multinational ‘n1’
Overview
• The group has a workforce of over ‘a1’ employees and operates in over ‘a2’ countries in ‘r1’, ‘r2’, ‘r3’ and ‘r4’ • Company 2 is among the largest players in the Indian ‘n2’ industry • It is among the largest manufacturers of ‘p1’ in the world, producing over ‘a3’ units annually
• The company operates an extensive distribution network of ‘a4’ authorized dealers and ‘a5’ retailers across the country
Business Operations
• It also has ‘a6’ marketing offices and a government-approved research and development (R&D) center that employs over ‘a7’ engineers • The company operates ‘a8’ manufacturing facilities spread across India The manufacturing facilities are ‘c1’ certified for ‘s1’, ‘c2’ certified for ‘s2’, ‘c3’ certified for ‘s3’ and ‘c4’ certified for ‘s4’ Moreover, all the products manufactured by the company are ‘c5’ certified by ‘n3’
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Private: Company 2 – SWOT Analysis (5/5)
S
W
O
T
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